Dollar General is taking over rural America, and it should terrify Walmart (DG, WMT)

Mary Hanbury

Dec. 5, 2018, 08:51 AM

AP

Dollar General is expanding rapidly in the United States. In 2017, it opened new locations at a rate of around four stores a day. In 2018, it is on track to open 900 new stores.

In a call with investors on Tuesday, the company said that it would open a further 975 stores in 2019.

According to data from GlobalData Retail, 75% of the population is now within five minutes of a Dollar General store. Meanwhile, 37% live within five minutes of a Walmart store, and 90% within 15 minutes of a Walmart.

Dollar General is looking to compete with Walmart by rolling out more fresh produce to its stores and making them a suitable place to pick up midweek groceries.

Dollar General is on a path to dominate America, and it should terrify Walmart.

The discount store, which is known for being a bargain hunter's paradise, has been described as growing at a pace that is largely "unthinkable" in retail.

In 2017, it opened new locations at a rate of around four stores a day and is currently on track to open a further 900 by the end of fiscal 2018.

On Tuesday, the company reported third-quarter earnings and continued its 28-year-long sales-growth streak, reporting a 2.8% increase in same-store sales. In a call with investors after reporting earnings, CEO Todd Vasos announced that the company plans to open a further 975 stores in 2019 and remodel 1,000 others.

When it started to grow, Dollar General's strategy was to go where Walmart wasn't. This meant that the majority of its stores in the United States were located in rural and suburban areas. According to data from GlobalData Retail, 75% of the US population is now within five minutes of a Dollar General store.

Meanwhile, 37% live within five minutes of a Walmart store, and 90% within 15 minutes of a Walmart, Neil Saunders, managing director of GlobalData Retail, told Business Insider on Tuesday.

However, Dollar General is not only putting Walmart under pressure by expanding its physical presence in the US but also by expanding its assortment.

It has long been known for offering non-perishables. However, in an effort to draw in more frequent visitors, it has brought fresh produce to 425 locations and plans to add this to 200 more locations in 2019.

This enables it to better compete with Walmart and become the go-to place for a mid-week shop for some consumers.